FRANKFORT, Ky. — Called back into session after a stinging loss at the Supreme Court, Kentucky's Republican-dominated legislature decided to go home on Tuesday without passing a replacement pension law despite warnings of financial ruin by the state's GOP governor.
Kentucky has one of the worst-funded pension systems in the country, as state officials are at least $38 billion short of the money needed to pay retirement benefits over the next three decades.
A pension law signed by Gov. Matt Bevin earlier this year was struck down by the state Supreme Court on procedural grounds last week. Monday, Bevin called lawmakers back into session to pass it again. But when lawmakers arrived, they were frustrated to find the two bills Bevin proposed were different than the law they had passed eight months earlier.
"It caused them a great deal of consternation to come in here yesterday, to see the bills last night — when we finally got to see them — and to see they were not what they expected," acting GOP House Speaker David Osborne said. "And it just, it really caused a great deal of pause among a lot of our members."
Bevin denied that he or his office had written the proposals, telling reporters: "I've not even read that whole bill." Bevin's attorney had sent lawmakers a letter earlier in the day, telling them they supported removing language from the bill that might prompt a lawsuit.
But after meeting with Republican legislative leaders in his office, Bevin said it was clear lawmakers did not have an appetite to pass what he called "a lesser version" of the original pension law. Bevin said that "doesn't bode well for Kentucky."
"It honestly makes me sad when I hear people celebrate and dance upon their own financial graves," Bevin said, referring to cheers from public workers in the gallery when lawmakers adjourned the legislative session without passing a bill. "People cheer the fact that the system is now in worse condition than it ever was."
Bevin and Osborne said passing a new pension bill will be a priority for the upcoming legislative session scheduled to begin Jan. 8. Republicans will still have super-majorities in both the House and Senate when lawmakers return. But the 2019 legislature will have 32 new members in the House of Representatives, including 16 new Republicans.
Many of those incoming members said they were frustrated at lawmakers calling a special session on pensions three weeks before they were scheduled to take office. They included Travis Brenda, a high school math teacher who opposes the pension legislation and defeated House Majority Floor Leader Jonathan Shell in a GOP primary. Brenda noted each day lawmakers were in session cost taxpayers nearly $66,000.
"That's more than the households in district 71 are making in a year," Brenda said. "We could handle this problem in three weeks."
Bevin said he couldn't afford to wait that long. He said two of the country's three major ratings agencies had already contacted his administration, leading him to believe the state was in danger of a credit rating downgrade that could cost taxpayers tens of millions of dollars.
Bevin's lawyer, Steve Pitt, told lawmakers in a letter on Tuesday that's why they had changed the pension law by removing provisions they thought would prompt a lawsuit that could put the state in court for another year.
"I am confident the Commonwealth would win (in a lawsuit,)" Pitt wrote in the letter to lawmakers. "But the problem with that approach is that the credit markets need certainty now, not a year from now."
But some Republican lawmakers bristled at backing down, especially after they had spent the election season campaigning on the pension bill they had passed, known as Senate bill 151.
"The current (GOP caucus) members, all but four of which were re-elected, campaigned on 151, were proud of 151 and want to defend 151," Republican state Rep. Jerry Miller said. "So we have a difference with the governor from the standpoint of defending our work as opposed to winding up in court."
This story has been corrected to say the letter to state lawmakers was from Steve Pitt, Gov. Bevin's attorney, not from state Budget Director John Chilton.